Rhode Island Insurance Adjuster Exam

Which of the following is an example of an indirect loss?

1. Theft of a vehicle

2. Damage to a vehicle caused by an accident

3. Medical expenses from an injury

4. Rental claim while your vehicle is being repaired

The correct answer is: Rental claim while your vehicle is being repaired

An indirect loss refers to the financial consequences that occur as a result of a direct loss, but do not stem from the immediate damage itself. In this case, the rental claim while your vehicle is being repaired exemplifies an indirect loss because it represents additional expenses incurred due to the initial loss of the vehicle, which was either stolen or damaged. When a vehicle is stolen or damaged, the owner typically faces other costs, such as needing a rental car to maintain mobility. Thus, the expense of renting another vehicle while the damaged vehicle is being repaired or replaced is a consequence of the initial, direct loss and illustrates the nature of indirect losses. This concept emphasizes the ripple effect that direct losses can have on an individual’s financial situation. In contrast, the other options represent direct losses. Theft of a vehicle is a direct loss because it involves the loss of the vehicle itself. Damage to a vehicle caused by an accident is similarly a direct loss, as it pertains to the direct physical impairment of the vehicle. Medical expenses from an injury can also be considered direct losses, deriving directly from the injury event itself.